TIDMAVN
RNS Number : 2776Y
Avanti Communications Group Plc
16 May 2016
AVANTI COMMUNICATIONS GROUP PLC
Q3 2016 Trading Update
Quarterly growth momentum continues
Avanti Communications Group plc ("Avanti" or "the Group"), a
leading provider of satellite data communications services in
Europe, the Middle East and Africa, issues the following trading
update for the period ended 31 March 2016.
Highlights
-- Third quarter revenue was $19.5m representing 14.7% growth
versus the second quarter on a constant currency basis
-- Full year guidance re-affirmed and underpinned by strong contract win momentum
-- Period end cash balance was $122.4m
-- HYLAS 4 remains on target for launch with early pre-sales already signed
Trading overview
Third quarter revenue was $19.5m, representing sequential growth
over the previous quarter of 14.7% on a constant currency basis.
EBITDA was $0.4m due to the growth in revenue above the Group's
largely fixed cash cost base.
Order wins were strong in the third quarter, with all material
customer renewals completing. In addition, Avanti won an important
new contract to provide connectivity to 4G cellular base stations
in the UK with EE, post the quarter end. This demonstrates that in
the highest resilience and quality end of the market Avanti has
clear advantages. Our backhaul proposition is gaining significant
traction now with several new major networks around EMEA with early
stage projects installed or contracting with Avanti.
Market demand for High Throughput Ka band satellite capacity
across EMEA is strong. Avanti continues to secure new high quality
customers, particularly in the large telco and government sectors,
where sales cycles are long but contract value is high. This
success is being driven by either migration from more expensive and
lower capability legacy systems; or the ability of high quality Ka
band networks to grow the market for new satellite applications. As
a result, the sales pipeline for the current fleet is strong and is
expected to result in ongoing increases in the utilisation of those
satellites.
Marketing of Avanti's new capacity is also progressing well. The
investment that Avanti has made in improving and expanding the
sales force to prepare for the new launches is beginning to
generate strong returns. The first pre-sales on HYLAS 4 were
achieved in the third quarter to existing customers and sales
discussions with key target customers in new markets are well
advanced; both with existing customers expanding into new markets
and new customers buying for the first time.
Top-20 Customer Bandwidth Revenue Growth was 59.0% on a constant
currency basis. This metric helps to track Avanti's growth
trajectory from core service sales, excluding non-recurring items.
It is calculated by comparing the revenues from Avanti's current
leading customers on a last 12 month basis to the 12 months
preceding that.
Average Fleet Utilisation was within the 25% to 30% range during
the third quarter, having entered into this range during the second
quarter. This metric helps to track capacity uptake and gives an
indication of revenue potential when Avanti's fleet is mature. It
is calculated by dividing average utilised forward capacity by
total available capacity for the fleet of in-service
satellites.
Contracted backlog was $402.0m, having been impacted by the
translation of Sterling and Euro based contracts into the Group's
reporting currency. This metric does not capture the expected
growth from Avanti's many framework contracts.
Fleet expansion
Avanti's capacity expansion programme is progressing in
accordance with expectations. The 3GHz HYLAS 2-B steerable beam is
expected to enter into service during the current financial year,
offering enhanced coverage of Central Europe.
Avanti's HYLAS 4 satellite remains on-track for launch in the
first calendar quarter of 2017. This large satellite will more than
triple our fleet capacity with no material increase in cost base.
Early signs from the pre-sales campaign are positive. We have taken
several orders for HYLAS 4 capacity and demand in West Africa
appears strong across all sectors. HYLAS 4 is key to Avanti because
it completes coverage of Africa, and our customers are increasingly
multinational and many want a scaled international offering from a
single provider. It also uses new technology to generate more
efficiency, which will continue to increase value for money for
customers. Work on the smaller HYLAS 3 satellite, which is a hosted
payload on a European Space Agency space craft, is progressing,
with Avanti's payload substantially finished, awaiting the
completion of the spacecraft.
Balance sheet
Period end cash was $122.4m. Avanti has additional consented
credit capacity of $71.0m. As planned, the Group has made good
progress towards securing additional liquidity. Several different
facilities have been offered and the most attractive is in
documentation.
Current trading and outlook
Guidance for approximately 50% growth in continuing business
revenue on a constant currency basis in the full 2016 financial
year is re-affirmed. This guidance is underpinned by the strong and
ongoing contract win momentum, with an element of revenue that we
had expected to be recognised in the third quarter, moving into
Q4.
The medium-term outlook is positive, with in-service capacity
due to increase by more than threefold before the end of the next
financial year. A combination of increasing utilisation on the
existing fleet, revenues from the new capacity and Avanti's largely
fixed cash cost base is expected to result in very strong cash
generation as the business matures.
David William's, Avanti's CEO said:
"Avanti is making good progress. We are seeing significant sales
momentum on our existing fleet from the best quality customers. We
are now months away from the launch of HYLAS 4. Avanti is currently
carrying the costs associated with this large new satellite, both
in terms of corporate overhead and debt on the balance sheet, with
the corresponding revenue benefit to flow in 2017. HYLAS 4 will
triple the satellite capacity of the company and so it should have
a transformational effect on the business. We are intensely focused
on increasing utilisation of our existing capacity and driving
sales on HYLAS 4, such that we will see a very significant growth
in revenue in the medium-term with a de minimis increase in
Avanti's cash cost base."
For further information please contact:
Avanti: Matthew Springett, +44 (0)207 749 6703
Cenkos Securities: Max Hartley (Nomad) / Julian Morse, +44
(0)207 397 8900
Montfort: Nick Miles / James Olley, +44 (0)203 770 7909
Redleaf: Hannah Nicolas, +44 (0)207 382 4734
Notes to editors
Avanti connects people wherever they are - in their homes,
businesses, in government and on mobiles. Through the HYLAS
satellite fleet and more than 180 partners in 118 countries, the
network provides ubiquitous internet service to a quarter of the
world's population. Avanti delivers the level of quality and
flexibility that the most demanding telecoms customers in the world
seek.
Avanti is the first mover in high throughput satellite data
communications in EMEA. It has rights to orbital slots and Ka band
spectrum in perpetuity that covers an end market of over 1.7bn
people.
The Group has invested $1.2bn in a network that incorporates
satellites, gateway earth stations, datacentres and a fibre
ring.
Avanti has a unique Cloud based customer interface that is
protected by patented technology.
The Group has three satellites in orbit and a further two fully
funded satellites under construction.
Avanti Communications is listed in London on AIM (AVN:LSE).
www.avantiplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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